Will Europe’s Privacy Concerns Affect Google Inc (GOOG)?

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Europe is known to have relatively strong consumer protection laws, and a number of countries have threatened Google Inc (NASDAQ:GOOG) with fines in the wake of the PRISM tracking scandal. While talk of enraged European regulators sounds dangerous, it isn’t likely that there will be a serious hit to Google’s bottom line. France’s fine for the street view snooping fiasco was a whopping 100,000 euros–chump change for a company that brought in $3.3 billion in total net income last quarter.

Google Inc (GOOG)

What Is the Worst that Can Happen?

By adding up all of the potential fines, Google Inc (NASDAQ:GOOG) is facing a total bill of a couple million Euros, nothing more. The United Kingdom has changed its cookie law and tried to make consumer’s rights clearer, but websites in the country continue to operate perfectly well. Google is very profitable in the United Kingdom, with a market share around 90%, and it is not like things will change any time soon. On a separate note EU antitrust regulators have required Google Inc (NASDAQ:GOOG) to change how it displays some of its results, but these changes are not monumental.

There is a good chance that Microsoft Corporation (NASDAQ:MSFT) won’t be left out of the party. Its Bing search engine is nowhere near as prevalent in Europe as Google, but PRISM is reported to be involved with Microsoft. If the company is fined a couple million Euros it won’t be a big hit for the company, as its total net income of $6 billion last quarter.

If anything, Microsoft Corporation (NASDAQ:MSFT) may benefit from tighter European data privacy laws vis-à-vis Google. Google Inc (NASDAQ:GOOG) runs massive third party ad networks with its Adsense program. Microsoft has no expansive ad network like Adsense and it is less exposed to the online advertising market. In 2012 Google made net digital ad revenues of $32.7 billion dollars while Microsoft Corporation (NASDAQ:MSFT) made $1.7 billion. To increase its Adsense revenue, Google collects as much user data as possible and then sells ads based upon these profiles. If Europe significantly decreases the amount of data that companies can collect, Google Inc (NASDAQ:GOOG) could see its revenue fall. For the time being this is just a distant possibility.

A Possible Winner in the Midst of the PRISM
Scandal

Yandex NV (NASDAQ:YNDX) is the most popular search engine in Russia. By focusing on the Russian market and developing a quality local search experience, it holds a market share around 60%. With the Cold War still relatively fresh in the Russian government’s mind, Russian American relations can be very chilly. Although the cold war might be over, the Russian government is doing all that it can to push the U.S. out of Eurasia. In fact there is talk of a Eurasian Union, and Russia is very excited to regain some of its former strength.
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